No IPO for Zillow as ad recession hits home

Zillow.com is one of the most heavily funded Internet startups in the country. But don’t look for the Seattle online real estate upstart to conduct an initial public offering this year.

Speaking at a technology conference in Silicon Valley this week, Zillow Chief Financial Officer Spencer Rascoff said they would think about an IPO in 2009 but “definitely” won’t be going out this year, according to a report in TheDeal.com.

But what was even more interesting in the report was Rascoff’s comment about the online advertising market, which he said was in the throes of recession that was having an impact on Zillow’s sales.

“There’s an online advertising recession right now, and we are not immune,” he said, according to TheDeal.

That’s especially intriguing since the Zillow leadership has always maintained a very bullish outlook on the prospects of building a business model entirely around online advertising.

“The volume of advertising dollars that are going after these people as they have these conversations around spending money, it is effectively infinite. It is so huge,” said Zillow CEO Rich Barton after raising $30 million last fall. “It is the biggest advertising category.”

With a total of $87 million in venture financing, Zillow will eventually need the ad market to pick up to justify its lofty valuation with investors.

Could Rascoff’s comments signal a chink in Zillow’s armor?

[Via Bloodhound Blog, which also notes that Zillow is rolling out Google Street View images of homes on the site.]